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View Diary: Guess Who’s America’s Largest Creditor (Hint: It’s NOT China) (160 comments)

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  •  Not On Net (0+ / 0-)

    We're not talking about "on net". We're talking about whether money actually exists or not. The transactions are not netted. The Treasury instruments are actually bought by the Fed with actual cash, actually collected by the Fed from depositors and investors Years later the Treasury actually pays actual cash, the maturity value, of the instruments, to the Fed. There is no netting. The money actually changes hands in its entirety. If the Treasury squandered the money it borrowed so didn't have the principal plus interest from other receipts, and wouldn't inflate the currency by creating more dollars as repayment, it would be in default.

    If there's any "similar confusion" on anyone's part about principal, it's on your part. You are claiming the principal is netted instantaneously, but it is not. That relation between the Treasury and the Fed is the same as between any creditor and debtor. The unusual relation comes after the debt is paid, when interest is repaid to the borrower. But that doesn't change the necessity and actuality of the Treasury coming up with that interest from other sources to pay it to the Fed first - just as in any creditor/debtor transaction.

    And I don't know how you can claim that your ignoring the inflationary prices that result from inflated money supply are irrelevant to your argument. The larger part of your post said:

    The whole national "debt" issue is meaningless because we print our own money in unlimited amounts and therefore can pay the "debt" in full at any time.  That is why "safe haven" investors always buy our debt -- they know we will always pay it because why wouldn't we?

    We cannot actually print our own money in unlimited amounts, and therefore can't repay the debt in full at any time, because we cannot wreak that inflation havoc on prices. You argue we can, because you ignore inflation. I bring it up because it is real.

    The actual payments are real; netting is not. Inflation is real; unlimited money supply is not.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Mon May 26, 2014 at 12:50:03 PM PDT

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    •  Your blockquote is from ThinkFirst (0+ / 0-)

      not me. Like I said you seem to have me confused with MMT folk.

      Plus the whole concept of Treasury paying "cash" to the Fed is a little confused. It is not like they load up a train in DC with currency and drop it off at the front door of the New York Fed (which manages the Feds SOMA).

      SocSec dot.Defender at - founder DK Social Security Defenders Group

      by Bruce Webb on Mon May 26, 2014 at 02:28:02 PM PDT

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      •  Cash (0+ / 0-)

        Of course "cash" doesn't mean only physical currency notes. I paid cash down on my house to my mortgage lender, but it was by check. A numerical value was subtracted from the computer records of my bank account and the equl numerical value was immediately added to the computer records of the lender's bank account. Calling that "cash" isn't confused; it's one of the well understood meanings of the term, all of which mean "liquid financial asset of national currency in the local denomination". Whether currency notes, or a personal check, or other cash instrument like a bank check etc.

        OK, the blockquote is from ThinkFirst, not Bruce Webb. But your first post in this subthread, in response to my first post in it, said

        You are essentially claiming I am equating any relation [...]

        If you are not ThinkFirst, nor are identifying with their post, then how can you say that I am claiming you are doing anything? Until you wrote that sentence, I said nothing about anything you said.

        Look, if all you've got in response to my last post is a meaningless semantic quibble about "cash", without responding to my rejection of your notions about netting debt payments, then you're not really disagreeing. I'm not going to bother having a conversation like that.

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Mon May 26, 2014 at 03:02:45 PM PDT

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        •  I took your 10:46 as a reply (in part) (0+ / 0-)

          to my 8:54

          Sorry that wires got crossed and I took your "you" to refer to me.

          SocSec dot.Defender at - founder DK Social Security Defenders Group

          by Bruce Webb on Mon May 26, 2014 at 04:21:48 PM PDT

          [ Parent ]

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